Air Products Reports Very Strong Fiscal 2017 Fourth Quarter and Full-Year Results

Transcription

1 News Release Air Products and Chemicals, Inc Hamilton Boulevard Allentown, PA Air Products Reports Very Strong Fiscal 2017 Fourth Quarter and Full-Year Results Q4 FY17 (all from continuing operations): GAAP EPS of $2.15, up 63 percent versus the prior year; GAAP net income of $474 million Adjusted EPS of 1.76*, up 18 percent versus prior year; previous adjusted guidance of $1.65 to $1.70 Adjusted EBITDA margin of 34.9 percent* Fiscal 2017 (all from continuing operations): GAAP EPS of $5.16, up two percent versus prior year; GAAP net income of $1.1 billion Adjusted EPS of $6.31*, up 12 percent versus prior year Adjusted EBITDA margin of 34.1 percent* Highlights Completed spin-off of Versum Materials and sale of Performance Materials business Brought major projects onstream, including large hydrogen plant for BPCL in India; large air separation unit (ASU) in Pyeongtaek City, South Korea; and large ASU for Yitai in China Made significant progress on the world's largest industrial gas complex in Jazan, Kingdom of Saudi Arabia (KSA) Signed agreement to form $1.3 billion joint venture for Lu'An coal-to-syngas project in China New project wins around the world for key customers in the electronics, manufacturing and chemical markets Guidance Fiscal 2018 adjusted EPS guidance of $6.85 to $7.05 per share, up nine to 12 percent over prior year; fiscal 2018 first quarter adjusted EPS guidance of $1.60 to $1.70 per share, up nine to 16 percent over the fiscal 2017 first quarter. This guidance excludes the Lu'An project and any other significant acquisitions. *The results and guidance in this release, including in the highlights above, include references to non-gaap continuing operations measures. These exclude discontinued operations and are identified by the word adjusted preceding the measure. A reconciliation of GAAP to non-gaap results can be found below. LEHIGH VALLEY, Pa. (October 26, 2017) Air Products (NYSE: APD) today reported GAAP net income from continuing operations of $474 million and GAAP diluted earnings per share (EPS) from continuing operations of $2.15, up 64 percent and 63 percent, respectively, from the prior year, for its fiscal fourth quarter ended September 30, On a non-gaap basis, quarterly adjusted diluted earnings per share from continuing operations of $1.76 showed very strong growth, up 18 percent versus prior year.

2 Page 2 of 20 Fourth quarter sales of $2,203 million increased 13 percent from the prior year, on nine percent higher volumes, two percent higher pricing, and favorable energy pass-through and currency of one percent each. Volumes were higher in all three Gas regions. For the quarter, adjusted EBITDA of $769 million increased 13 percent over the prior year on strong volume growth, higher pricing and productivity. Adjusted EBITDA margin of 34.9 percent increased 10 basis points from the prior year and was negatively impacted by 30 basis points from higher energy pass-through; excluding this impact, adjusted EBITDA margin increased 40 basis points. Fiscal 2017 For the year, Air Products reported GAAP net income from continuing operations of $1.1 billion and GAAP diluted EPS from continuing operations of $5.16, up three percent and two percent, respectively. On a non-gaap basis, adjusted diluted earnings per share from continuing operations of $6.31 was up 12 percent versus prior year, the third consecutive year of significant growth. Sales of $8.2 billion increased nine percent over prior year, on six percent higher volumes, three percent higher energy pass-through and one percent higher pricing, partially offset by one percent unfavorable currency. Adjusted EBITDA of $2.8 billion increased seven percent over the prior year, led by strong volume growth and productivity. Adjusted EBITDA margin of 34.1 percent decreased 80 basis points and was negatively impacted by 90 basis points from higher energy pass-through; excluding this impact, adjusted EBITDA margin was up 10 basis points. Commenting on the results, Seifi Ghasemi, chairman, president and chief executive officer, said, "The talented, committed and dedicated team at Air Products, our people, delivered an excellent set of results. For the fourth quarter of fiscal 2017, our adjusted EPS was up 18 percent versus the fourth quarter of fiscal 2016, and for fiscal 2017, adjusted EPS is 12 percent higher than last year. This is the fourteenth consecutive quarter that we have reported year-on-year adjusted EPS growth. This is also the third consecutive year that we have delivered adjusted EPS growth of more than 10 percent. "We generated strong cash flow and returned about $800 million of that to our shareholders through dividends. We continue to be the safest and most profitable industrial gas company in the world, with adjusted EBITDA margin of over 34 percent. We have a great team that is totally focused on delivering strong performance, day in and day out. Ultimately, our success is built on providing excellent service to our customers. We are committed to providing them with the right innovations and solutions to make their processes better." Fourth Quarter Results by Business Segment Gases Americas sales of $953 million increased nine percent, primarily driven by seven percent higher volumes. Hydrogen demand was strong despite hurricane impacts on the Gulf Coast. Operating income of $266 million increased 19 percent. Adjusted EBITDA of $402 million increased 14 percent on higher volumes, lower maintenance costs and productivity actions. Adjusted EBITDA margin of 42.2 percent increased 220 basis points over the prior year. Higher energy pass-through negatively impacted adjusted EBITDA margin by 60 basis points; excluding energy pass-through, adjusted EBITDA margin increased 280 basis points. Gases EMEA sales of $515 million increased 24 percent versus last year, driven by 18 percent higher volumes and five percent favorable currency. The higher volumes were primarily from a new hydrogen plant in India; merchant demand was also positive. Operating income of $119 million increased 21 percent. Adjusted EBITDA of $180 million increased 17 percent over the prior year, primarily from the India plant as well as higher merchant volumes, productivity and the positive currency impact. Adjusted EBITDA margin of 35.0 percent decreased 220 basis points from the prior year, driven by the India hydrogen plant. While this plant delivers strong returns, the significant energy pass-through is dilutive to margins. Gases Asia sales of $552 million increased 23 percent over prior year, with volumes up 17 percent and pricing up six percent. Approximately two-thirds of this volume growth was from new plants, while the remaining third was from broad, base business growth. China merchant pricing drove the overall pricing improvement. Operating income of $152 million increased 38 percent. Adjusted EBITDA of $224 million increased 31 percent, and adjusted EBITDA margin of 40.6 percent increased 240 basis points on strong volumes and higher pricing.

3 Page 3 of 20 Outlook Ghasemi said, We continue to be optimistic about the future performance of Air Products and the opportunities we see in front of us. We have the strongest balance sheet in the industry, with over $8 billion available to invest over the next three years. We remain confident in our ability to create shareholder value by deploying this capital through acquisitions, asset buybacks and very large industrial gas projects around the world, driven by demand for more energy, cleaner energy and emerging market growth. We are committed to delivering excellent short-term and longterm performance by improving our adjusted EPS by 10 percent every year, as we have done in the past three years." Air Products expects fiscal 2018 adjusted EPS of $6.85 to $7.05 per share, up nine to 12 percent over last year. For the fiscal 2018 first quarter, Air Products expects adjusted EPS from continuing operations of $1.60 to $1.70 per share, up nine to 16 percent over last year. This guidance excludes the Lu'An project and any other significant acquisitions. The capital expenditure forecast for fiscal year 2018 is expected to be in the range of $1 to $1.2 billion on a GAAP and non-gaap basis. This guidance excludes Lu'An and any other significant acquisitions. Management has provided adjusted EPS guidance on a continuing operations basis. While Air Products might incur additional costs for items such as cost reduction actions and pension settlements in future periods, it is not possible, without unreasonable efforts, to identify the amount or significance of these events or the potential for other transactions that may impact future GAAP EPS. Management does not believe these items to be representative of underlying business performance. Accordingly, management is unable to reconcile, without unreasonable effort, the Company s forecasted range of adjusted EPS to a comparable GAAP range. Earnings Teleconference Access the Q4 earnings teleconference scheduled for 10:00 a.m. Eastern Time on October 26 by calling (323) and entering passcode , or access the Event Details page on Air Products Investor Relations web site. About Air Products Air Products (NYSE:APD) is a world-leading Gases company in operation for over 75 years. The Company s core industrial gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. Air Products is also the world s leading supplier of liquefied natural gas process technology and equipment. The Company had fiscal 2017 sales of $8.2 billion from continuing operations in 50 countries and has a current market capitalization of approximately $30 billion. Approximately 15,000 passionate, talented and committed employees from a diversity of backgrounds are driven by Air Products higher purpose to create innovative solutions that benefit the environment, enhance sustainability and address the challenges facing customers, communities, and the world. For more information, visit NOTE: This release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance, business outlook and investment opportunities. These forward-looking statements are based on management s reasonable expectations and assumptions as of the date this release is furnished. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including, without limitation, global or regional economic conditions and supply and demand dynamics in market segments into which the Company sells; political risks, including the risks of unanticipated government actions; acts of war or terrorism; the inability to eliminate stranded costs previously allocated to the Company s Electronic Materials and Performance Materials divisions, which have been divested, and other unexpected impacts of the divestitures; significant fluctuations in interest rates and foreign currencies from that currently anticipated; future financial and operating performance of major customers; unanticipated contract terminations or customer cancellations or postponement of projects and sales; our ability to execute the projects in our backlog; asset impairments due to economic conditions or specific events; the impact of price fluctuations in natural gas and disruptions in markets and the economy due to oil price volatility; costs and outcomes of litigation or regulatory investigations; the success of productivity and operational improvement programs; the timing, impact, and other uncertainties of future acquisitions or divestitures, including reputational impacts; the Company s ability to implement and operate with new technologies; the impact of changes in environmental, tax or other legislation, economic sanctions and regulatory activities in jurisdictions in which the Company and its affiliates operate; and other risk factors described in the Company s Form 10-K for its fiscal year ended September 30, The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release to reflect any change in the Company s assumptions, beliefs or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

4 Page 4 of 20 # # # Media Inquiries: Katie McDonald, tel: (610) ; mcdonace@airproducts.com Investor Inquiries: Simon Moore, tel: (610) ; mooresr@airproducts.com

5 Page 5 of 20 * Presented below are reconciliations of the reported GAAP results to the non-gaap measures. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Millions of dollars unless otherwise indicated, except for share data) The Company has presented certain financial measures on a non-gaap ( adjusted ) basis and has provided a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These financial measures are not meant to be considered in isolation or as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. The Company believes these non-gaap measures provide investors, potential investors, securities analysts, and others with useful information to evaluate the performance of the business because such measures, when viewed together with our financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. In many cases, our non-gaap measures are determined by adjusting the most directly comparable GAAP financial measure to exclude certain disclosed items ( non-gaap adjustments ) that we believe are not representative of the underlying business performance. For example, Air Products has executed its strategic plan to restructure the Company to focus on its core Gases business. This resulted in significant cost reduction and asset actions that we believe are important for investors to understand separately from the performance of the underlying business. The reader should be aware that we may incur similar expenses in the future. The tax impact of our non-gaap adjustments reflects the expected current and deferred income tax expense impact of the transactions and is impacted primarily by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions. Investors should also consider the limitations associated with these non-gaap measures, including the potential lack of comparability of these measures from one company to another. CONSOLIDATED RESULTS 2017 vs Operating Income Operating Margin (A) Continuing Operations Three Months Ended 30 September Equity Affiliates' Income Income Tax Provision (Benefit) (B) Net Income Diluted EPS 2017 GAAP $ %$ 44.8 $ (1.3) $ $ GAAP % Change GAAP $ bp $ 5.5 $ (98.1) $ $.83 % Change GAAP 17% 14% (101)% 64 % 63% 2017 GAAP $ %$ 44.8 $ (1.3) $ $ 2.15 Business restructuring and cost reduction actions % Pension settlement loss.9 %.3.6 Gain on land sale (C) (12.2) (.5)% (4.6) (7.6 ) (.03) Tax election benefit % (111.4 ) (.50) 2017 Non-GAAP Measure $ %$ 44.8 $ $ $ GAAP $ %$ 39.3 $ 96.8 $ $ 1.32 Business separation costs % Tax costs associated with business separation % (4.1 ) Business restructuring and cost reduction actions % Pension settlement loss % Loss on extinguishment of debt (D) % Non-GAAP Measure $ % $ 39.3 $ $ $ 1.49 Change Non-GAAP Measure $ bp $ 5.5 $ 21.5 $ 61.0 $.27 % Change Non-GAAP Measure 16 % 14 % 21 % 19 % 18 %

6 Page 6 of vs Operating Income Operating Margin (A) Continuing Operations Twelve Months Ended 30 September Equity Affiliates' Income Income Tax Provision (B) Net Income Diluted EPS 2017 GAAP $ 1, %$ 80.1 $ $ 1,134.4 $ GAAP 1, % , Change GAAP $ (102.1 ) (300 )bp $ (66.9) $ (171.7) $ 34.9 $.12 % Change GAAP (7 )% (46)% (40)% 3 % 2% 2017 GAAP $ 1, %$ 80.1 $ $ 1,134.4 $ 5.16 Business separation costs % Tax benefit associated with business separation % 5.5 (5.5) (.02) Business restructuring and cost reduction actions (E) % Pension settlement loss % Goodwill and intangible asset impairment charge (F) % Gain on land sale (C) (12.2 ) (.1 )% (4.6) (7.6 ) (.03) Equity method investment impairment charge % Tax election benefit % (111.4 ) (.50) 2017 Non-GAAP Measure $ 1, %$ $ $ 1,385.9 $ GAAP $ 1, % $ $ $ 1,099.5 $ 5.04 Business separation costs % Tax costs associated with business separation % (51.8 ) Business restructuring and cost reduction actions % Pension settlement loss % Loss on extinguishment of debt (D) % Non-GAAP Measure $ 1, % $ $ $ 1,230.3 $ 5.64 Change Non-GAAP Measure $ bp $ 12.6 $ 28.1 $ $.67 % Change Non-GAAP Measure 9 % 9 % 7 % 13 % 12 % (A) (B) (C) Operating margin is calculated by dividing operating income by sales. The tax impact of our non-gaap adjustments reflects the expected current and deferred income tax expense impact of the transactions and is impacted primarily by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions. Refer to Note 7, Tax Election Benefit, for additional detail on the 2017 tax election benefit. Reflected on the consolidated income statements in Other income (expense), net. (D) Income from continuing operations before taxes impact of $6.9 for the three and twelve months ended 30 September (E) Noncontrolling interests impact of $.5 in fiscal year (F) Noncontrolling interests impact of $3.4 in fiscal year 2017.

7 Page 7 of 20 ADJUSTED EBITDA We define Adjusted EBITDA as income from continuing operations (including noncontrolling interests) excluding certain disclosed items, which the Company does not believe to be indicative of underlying business trends, before interest expense, other non-operating income (expense), net, income tax provision (benefit), and depreciation and amortization expense. Adjusted EBITDA provides a useful metric for management to assess operating performance. Below is a reconciliation of Income from Continuing Operations on a GAAP basis to Adjusted EBITDA: 2017 Q1 Q2 Q3 Q4 FY2017 Income from Continuing Operations (A) $ $ $ $ $ 1,155.2 Add: Interest expense Less: Other non-operating income (expense), net Add: Income tax provision (benefit) (1.3) Add: Depreciation and amortization Add: Business separation costs Add: Business restructuring and cost reduction actions Add: Pension settlement loss Add: Goodwill and intangible asset impairment charge Less: Gain on land sale (B) Add: Equity method investment impairment charge Adjusted EBITDA $ $ $ $ $ 2, Q1 Q2 Q3 Q4 FY2016 Income from Continuing Operations (A) $ $ $ $ $ 1,122.0 Add: Interest expense Add: Income tax provision Add: Depreciation and amortization Add: Business separation costs Add: Business restructuring and cost reduction actions Add: Pension settlement loss Add: Loss on extinguishment of debt Adjusted EBITDA $ $ $ $ $ 2,621.5 (A) (B) Includes net income attributable to noncontrolling interests. Reflected on the consolidated income statements in Other income (expense), net vs Q1 Q2 Q3 Q4 FY Change GAAP Income from continuing operations change $ (29.0) $ 25.4 $ (149.3) $ $ 33.2 Income from continuing operations % change (10)% 9 % (58)% 63 % 3 % Change Non-GAAP Adjusted EBITDA change $ 19.9 $ 13.7 $ 48.5 $ 91.4 $ Adjusted EBITDA % change 3 % 2 % 7 % 13 % 7 %

8 Page 8 of 20 Below is a reconciliation of segment operating income to Adjusted EBITDA: GAAP MEASURE Three Months Ended 30 September 2017 Gases Americas Gases EMEA Gases Asia Gases Global Corporate and other Segment Total Operating income (loss) $ $ $ $ 12.4 $ (56.2) $ Operating margin 27.9 % 23.0 % 27.5 % 22.4 % Three Months Ended 30 September 2016 Operating income (loss) $ $ 98.3 $ $ 22.7 $ (29.7) $ Operating margin 25.5 % 23.7 % 24.5 % 21.9 % Operating income (loss) change $ 42.0 $ 20.2 $ 42.0 $ (10.3) $ (26.5) $ 67.4 Operating income (loss) % change 19 % 21 % 38 % (45 )% (89 )% 16 % Operating margin change 240bp (70 ) bp 300bp 50 bp NON-GAAP MEASURE Three Months Ended 30 September 2017 Operating income (loss) $ $ $ $ 12.4 $ (56.2) $ Add: Depreciation and amortization Add: Equity affiliates' income Adjusted EBITDA $ $ $ $ 15.6 $ (53.5) $ Adjusted EBITDA margin 42.2 % 35.0 % 40.6 % 34.9 % Three Months Ended 30 September 2016 Operating income (loss) $ $ 98.3 $ $ 22.7 $ (29.7) $ Add: Depreciation and amortization Add: Equity affiliates' income Adjusted EBITDA $ $ $ $ 25.2 $ (25.2) $ Adjusted EBITDA margin 40.0 % 37.2 % 38.2 % 34.8 % Adjusted EBITDA change $ 50.7 $ 26.0 $ 52.6 $ (9.6) $ (28.3) $ 91.4 Adjusted EBITDA % change 14 % 17 % 31 % (38 )% (112 )% 13 % Adjusted EBITDA margin change 220 bp (220) bp 240 bp 10 bp

9 Page 9 of 20 GAAP MEASURE Twelve Months Ended 30 September 2017 Gases Americas Gases EMEA Gases Asia Gases Global Corporate and other Segment Total Operating income (loss) $ $ $ $ 71.3 $ (170.6) $ 1,769.6 Operating margin 26.1 % 21.7 % 27.0 % 21.6 % Twelve Months Ended 30 September 2016 Operating income (loss) $ $ $ $ (21.3) $ (87.6) $ 1,619.9 Operating margin 26.7 % 22.6 % 26.2 % 21.6 % Operating income (loss) change $ 57.4 $ 2.5 $ 80.2 $ 92.6 $ (83.0) $ Operating income (loss) % change 6 % 1 % 18 % 435 % (95 )% 9 % Operating margin change (60) bp (90 ) bp 80bp bp NON-GAAP MEASURE Twelve Months Ended 30 September 2017 Operating income (loss) $ $ $ $ 71.3 $ (170.6) $ 1,769.6 Add: Depreciation and amortization Add: Equity affiliates' income Adjusted EBITDA $ 1,473.1 $ $ $ 81.1 $ (158.4) $ 2,795.0 Adjusted EBITDA margin 40.5 % 34.3 % 40.1 % 34.1 % Twelve Months Ended 30 September 2016 Operating income (loss) $ $ $ $ (21.3) $ (87.6) $ 1,619.9 Add: Depreciation and amortization Add: Equity affiliates' income Adjusted EBITDA $ 1,389.5 $ $ $ (13.4) $ (68.1) $ 2,621.5 Adjusted EBITDA margin 41.6 % 35.6 % 41.1 % 34.9 % Adjusted EBITDA change $ 83.6 $ 4.5 $ 81.2 $ 94.5 $ (90.3) $ Adjusted EBITDA % change 6 % 1 % 11 % 705 % (133 )% 7 % Adjusted EBITDA margin change (110) bp (130) bp (100) bp (80) bp Below is a reconciliation of segment total operating income to consolidated operating income: Three Months Ended Twelve Months Ended 30 September 30 September Operating Income Segment total $ $ $ 1,769.6 $ 1,619.9 Business separation costs (21.7 ) (30.2 ) (50.6 ) Business restructuring and cost reduction actions (48.4 ) (10.6 ) (151.4 ) (34.5 ) Pension settlement loss (.9 ) (2.1 ) (10.5 ) (5.1 ) Goodwill and intangible asset impairment charge (162.1 ) Gain on land sale (A) Consolidated Total $ $ $ 1,427.6 $ 1,529.7 (A) Reflected on the consolidated income statements in Other income (expense), net.

10 Page 10 of 20 Below is a reconciliation of segment total equity affiliates' income to consolidated equity affiliates' income: Three Months Ended Twelve Months Ended 30 September 30 September Equity Affiliates' Income Segment total $ 44.8 $ 39.3 $ $ Equity method investment impairment charge (79.5) Consolidated Total $ 44.8 $ 39.3 $ 80.1 $ INCOME TAXES The tax impact of our non-gaap adjustments reflects the expected current and deferred income tax expense impact of the transactions and is impacted primarily by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions. Three Months Ended 30 September Effective Tax Rate Twelve Months Ended 30 September Income Tax Provision (Benefit) GAAP $ (1.3) $ 96.8 $ $ Income From Continuing Operations Before Taxes GAAP $ $ $ 1,416.1 $ 1,554.6 Effective Tax Rate GAAP (.3)% 24.7% 18.4% 27.8% Income Tax Provision (Benefit) GAAP $ (1.3) $ 96.8 $ $ Business separation costs Tax benefit (costs) associated with business separation (4.1) 5.5 (51.8) Business restructuring and cost reduction actions Pension settlement loss Goodwill and intangible asset impairment charge 4.6 Gain on land sale (4.6) (4.6) Equity method investment impairment charge Loss on extinguishment of debt Tax election benefit Income Tax Provision Non-GAAP Measure $ $ $ $ Income From Continuing Operations Before Taxes GAAP $ $ $ 1,416.1 $ 1,554.6 Business separation costs Business restructuring and cost reduction actions Pension settlement loss Goodwill and intangible asset impairment charge Gain on land sale (12.2 ) (12.2 ) Equity method investment impairment charge 79.5 Loss on extinguishment of debt Income From Continuing Operations Before Taxes Non-GAAP Measure $ $ $ 1,837.6 $ 1,651.7 Effective Tax Rate Non-GAAP Measure 23.9 % 23.5 % 23.2 % 24.2 %

11 Page 11 of 20 CAPITAL EXPENDITURES We utilize a non-gaap measure in the computation of capital expenditures and include spending associated with facilities accounted for as capital leases. Certain contracts associated with facilities that are built to provide product to a specific customer are required to be accounted for as leases, and such spending is reflected as a use of cash in the consolidated statements of cash flows within "Cash Provided by Operating Activities" if the arrangement qualifies as a capital lease. Below is a reconciliation of capital expenditures on a GAAP basis to a non-gaap measure: Three Months Ended 30 September Twelve Months Ended 30 September Capital expenditures for continuing operations GAAP basis $ $ $ 1,056.0 $ Capital lease expenditures Capital expenditures Non-GAAP basis $ $ $ 1,065.9 $ We expect capital expenditures for fiscal year 2018 to be approximately $1,000 to $1,200 on a GAAP and non-gaap basis.

12 Page 12 of 20 RETURN ON CAPITAL EMPLOYED (ROCE) Return on capital employed (ROCE) is calculated on a continuing operations basis as earnings after-tax divided by five-quarter average total capital. Earnings after-tax is calculated based on trailing four quarters and is defined as the sum of net income from continuing operations attributable to Air Products, interest expense, after-tax, at our effective quarterly tax rate, and net income attributable to noncontrolling interests. This non-gaap measure has been adjusted for the impact of the disclosed items detailed below. Total capital consists of total debt, total equity, and redeemable noncontrolling interest less noncontrolling interests and total assets of discontinued operations. FY2017 FY2016 Net income from continuing operations attributable to Air Products 1,134.4 $ 1,099.5 Interest expense Interest expense tax impact (27.5) (32.6) Interest expense, after-tax Net income attributable to noncontrolling interests of continuing operations Earnings After-Tax GAAP 1,248.3 $ 1,204.6 Disclosed items, after-tax Business separation costs 26.5 $ 46.7 Tax (benefit) costs associated with business separation (5.5) 51.8 Business restructuring and cost reduction actions Pension settlement loss Goodwill and intangible asset impairment charge Gain on land sale (7.6) Equity method investment impairment charge 79.5 Loss on extinguishment of debt 4.3 Tax election benefit (111.4) Earnings After-Tax Non-GAAP 1,499.8 $ 1,335.4 Five-Quarter Average Total Capital 12, ,779.4 ROCE GAAP items 10.1 % 11.2% Change GAAP-based Measure (110) bp ROCE Non-GAAP items 12.1 % 12.4% Change Non-GAAP-based Measure (30) bp

13 Page 13 of 20 OUTLOOK Guidance provided is on a non-gaap continuing operations basis, which excludes the impact of certain items that we believe are not representative of our underlying business performance. While we might incur additional costs for items such as cost reduction actions and pension settlements in future periods, it is not possible, without unreasonable efforts, to identify the amount or significance of these events or the potential for other transactions that may impact future GAAP EPS. Accordingly, management is unable to reconcile, without unreasonable effort, the Company s forecasted range of adjusted EPS on a continuing operations basis to a comparable GAAP range. Diluted EPS Q1 Full Year 2017 GAAP $ 1.15 $ 5.16 Business separation costs Tax costs (benefit) associated with business separation.01 (.02) Business restructuring and cost reduction actions Pension settlement loss.03 Goodwill and intangible asset impairment charge.70 Gain on land sale (.03) Equity method investment impairment charge.36 Tax election benefit (.50) 2017 Non-GAAP Measure $ 1.47 $ Non-GAAP Outlook Change Non-GAAP % Change Non-GAAP 9% 16% 9% 12%

14 Page 14 of 20 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED INCOME STATEMENTS (Unaudited) Three Months Ended Twelve Months Ended 30 September 30 September (Millions of dollars, except for share data) Sales $ 2,203.1 $ 1,945.5 $ 8,187.6 $ 7,503.7 Cost of sales 1, , , ,176.6 Selling and administrative Research and development Business separation costs Business restructuring and cost reduction actions Pension settlement loss Goodwill and intangible asset impairment charge Other income (expense), net Operating Income , ,529.7 Equity affiliates' income Interest expense Other non-operating income (expense), net Refer to Note Loss on extinguishment of debt Income From Continuing Operations Before Taxes , ,554.6 Income tax provision (benefit) (1.3) Income From Continuing Operations , ,122.0 Income (Loss) From Discontinued Operations, net of tax (5.5) ,866.0 (460.5) Net Income , Net Income Attributable to Noncontrolling Interests of Continuing Operations Net Income Attributable to Noncontrolling Interests of Discontinued Operations Net Income Attributable to Air Products $ $ $ 3,000.4 $ Net Income Attributable to Air Products Income from continuing operations $ $ $ 1,134.4 $ 1,099.5 Income (Loss) from discontinued operations (5.5 ) ,866.0 (468.4 ) Net Income Attributable to Air Products $ $ $ 3,000.4 $ Basic Earnings Per Common Share Attributable to Air Products Income from continuing operations $ 2.17 $ 1.33 $ 5.20 $ 5.08 Income (Loss) from discontinued operations (.02 ) (2.16 ) Net Income Attributable to Air Products $ 2.15 $ 1.81 $ $ 2.92 Diluted Earnings Per Common Share Attributable to Air Products Income from continuing operations $ 2.15 $ 1.32 $ 5.16 $ 5.04 Income (Loss) from discontinued operations (.02 ) (2.15 ) Net Income Attributable to Air Products $ 2.13 $ 1.80 $ $ 2.89 Weighted Average Common Shares Basic (in millions) Weighted Average Common Shares Diluted (in millions) Dividends Declared Per Common Share Cash $.95 $.86 $ 3.71 $ 3.39 Other Data from Continuing Operations Depreciation and amortization $ $ $ $ Capital expenditures Refer to page 11 $ $ $ 1,065.9 $ 934.9

15 Page 15 of 20 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited) 30 September 30 September (Millions of dollars) Assets Current Assets Cash and cash items $ 3,273.6 $ 1,293.2 Short-term investments Trade receivables, net 1, ,146.2 Inventories Contracts in progress, less progress billings Prepaid expenses Other receivables and current assets Current assets of discontinued operations Total Current Assets 5, ,317.3 Investment in net assets of and advances to equity affiliates 1, ,283.6 Plant and equipment, at cost 19, ,660.2 Less: accumulated depreciation 11, ,400.5 Plant and equipment, net 8, ,259.7 Goodwill, net Intangible assets, net Noncurrent capital lease receivables 1, ,221.7 Other noncurrent assets Noncurrent assets of discontinued operations 1,042.3 Total Noncurrent Assets 12, ,711.3 Total Assets $ 18,467.2 $ 18,028.6 Liabilities and Equity Current Liabilities Payables and accrued liabilities $ 1,814.3 $ 1,652.2 Accrued income taxes Short-term borrowings Current portion of long-term debt Current liabilities of discontinued operations Total Current Liabilities 2, ,283.1 Long-term debt 3, ,909.7 Other noncurrent liabilities 1, ,816.5 Deferred income taxes Noncurrent liabilities of discontinued operations 1,095.5 Total Noncurrent Liabilities 5, ,532.1 Total Liabilities 8, ,815.2 Air Products Shareholders Equity 10, ,079.6 Noncontrolling Interests Total Equity 10, ,213.4 Total Liabilities and Equity $ 18,467.2 $ 18,028.6

16 Page 16 of 20 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Twelve Months 30 September (Millions of dollars) Operating Activities Net income $ 3,021.2 $ Less: Net income attributable to noncontrolling interests of continuing operations Less: Net income attributable to noncontrolling interests of discontinued operations 20.8 Net income attributable to Air Products 3,000.4 (Income) Loss from discontinued operations (1,866.0) Income from continuing operations attributable to Air Products 1, ,099.5 Adjustments to reconcile income to cash provided by operating activities: Depreciation and amortization Deferred income taxes (38.0) 61.8 Loss on extinguishment of debt 6.9 Undistributed earnings of unconsolidated affiliates (60.1) (51.1) Gain on sale of assets and investments (24.3) (7.3) Share-based compensation Noncurrent capital lease receivables Goodwill and intangible asset impairment charge Equity method investment impairment charge 79.5 Write-down of long-lived assets associated with restructuring 69.2 Other adjustments Working capital changes that provided (used) cash, excluding effects of acquisitions and divestitures: Trade receivables (73.6) (44.8) Inventories Contracts in progress, less progress billings (19.3) 28.2 Other receivables (6.7) Payables and accrued liabilities Other working capital (154.0) (47.8) Cash Provided by Operating Activities 2, ,258.8 Investing Activities Additions to plant and equipment (1,039.7) (907.7) Acquisitions, less cash acquired (8.2) Investment in and advances to unconsolidated affiliates (8.1) Proceeds from sale of assets and investments Purchases of investments (2,692.6) Proceeds from investments 2,290.7 Other investing activities (2.3) (1.7) Cash Used for Investing Activities (1,417.7) (864.8) Financing Activities Long-term debt proceeds Payments on long-term debt (483.9) (480.4) Net decrease in commercial paper and short-term borrowings (798.6) (144.2) Dividends paid to shareholders (787.9) (721.2) Proceeds from stock option exercises Other financing activities (41.3) (42.6) Cash Used for Financing Activities (2,040.9) (860.2) Discontinued Operations Cash (used for) provided by operating activities (966.2) Cash provided by (used for) investing activities 3,750.6 (204.2) Cash provided by financing activities Cash Provided by Discontinued Operations 2, Effect of Exchange Rate Changes on Cash Increase in Cash and Cash Items 1, ,294.9 Cash and Cash items - Beginning of Year 1, Cash and Cash items - End of Period $ 3,273.6 $ 1,501.3 Less: Cash and Cash Items - Discontinued Operations Cash and Cash Items - Continuing Operations $ 3,273.6 $ 1,293.2 Supplemental Cash Flow Information Cash paid for taxes (net of refunds) (Inclusive of $947.9 and $66.8 related to discontinued operations for 2017 and 2016, respectively) $ 1,348.8 $ 440.8

17 Page 17 of 20 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY BUSINESS SEGMENTS (Unaudited) (Millions of dollars) Three Months Ended 30 September 2017 Gases Americas Gases EMEA Gases Asia Gases Global Corporate and other Segment Total Sales $ $ $ $ $ 12.1 $ 2,203.1 Operating income (loss) (56.2) Depreciation and amortization Equity affiliates' income Three Months Ended 30 September 2016 Sales $ $ $ $ $ 47.8 $ 1,945.5 Operating income (loss) (29.7) Depreciation and amortization Equity affiliates' income Twelve Months Ended 30 September 2017 Sales $ 3,637.0 $ 1,780.4 $ 1,964.7 $ $ 82.6 $ 8,187.6 Operating income (loss) (170.6) 1,769.6 Depreciation and amortization Equity affiliates' income Twelve Months Ended 30 September 2016 Sales $ 3,344.1 $ 1,704.4 $ 1,720.4 $ $ $ 7,503.7 Operating income (loss) (21.3) (87.6) 1,619.9 Depreciation and amortization Equity affiliates' income Total Assets 30 September 2017 $ 5,840.8 $ 3,276.1 $ 4,412.1 $ $ 4,648.4 $ 18, September , , , , ,060.1 Below is a reconciliation of segment total operating income to consolidated operating income: Three Months Ended Twelve Months Ended 30 September 30 September Operating Income Segment total $ $ $ 1,769.6 $ 1,619.9 Business separation costs (21.7 ) (30.2 ) (50.6 ) Business restructuring and cost reduction actions (48.4 ) (10.6 ) (151.4 ) (34.5 ) Pension settlement loss (.9 ) (2.1 ) (10.5 ) (5.1 ) Goodwill and intangible asset impairment charge (162.1 ) Gain on land sale (A) Consolidated Total $ $ $ 1,427.6 $ 1,529.7 (A) Reflected on the consolidated income statements in Other income (expense), net.

18 Page 18 of 20 Below is a reconciliation of segment total equity affiliates' income to consolidated equity affiliates' income: Three Months Ended Twelve Months Ended 30 September 30 September Equity Affiliates' Income Segment total $ 44.8 $ 39.3 $ $ Equity method investment impairment charge (79.5) Consolidated Total $ 44.8 $ 39.3 $ 80.1 $ Below is a reconciliation of segment total assets to consolidated total assets: 30 September 30 September Total Assets Segment total $ 18,457.0 $ 16,060.1 Discontinued operations ,968.5 Consolidated Total $ 18,467.2 $ 18,028.6

19 Page 19 of 20 (Millions of dollars, unless otherwise indicated) 1. MATERIALS TECHNOLOGIES SEPARATION AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On 16 September 2015, the Company announced plans to separate its Materials Technologies segment, which contained two divisions, the Electronic Materials Division (EMD) and the Performance Materials Division (PMD). On 1 October 2016, the Company completed the spin-off of EMD as Versum Materials, Inc., or Versum, an independent publicly traded company. On 3 January 2017, the Company completed the sale of PMD to Evonik Industries AG for $3.8 billion in cash. A gain of $2,870 ($1,828 after-tax, or $8.32 per share) was recognized on the sale. A portion of the proceeds from the sale have been included in "Short-term investments" on the consolidated balance sheets. Associated interest income has been reflected on the consolidated income statements as Other non-operating income (expense), net." As a result of these transactions, both EMD and PMD are reflected in our consolidated financial statements as discontinued operations for all periods presented. In fiscal year 2017, we incurred separation costs of $30.2 ($26.5 after-tax, or $.12 per share), primarily related to legal and advisory costs associated with these transactions. The costs are reflected on the consolidated income statements as Business separation costs. In addition, our income tax provision for fiscal year 2017 includes net tax benefits of $5.5 primarily related to changes in tax positions on business separation activities. The results of the Corporate and other segment include stranded costs related to the presentation of EMD and PMD as discontinued operations. The majority of these costs are reimbursed to Air Products pursuant to short-term transition services agreements under which Air Products provides transition services to Versum for EMD and to Evonik for PMD. The reimbursement for costs in support of the transition services has been reflected on the consolidated income statements within Other income (expense), net. We expect all transition services to end by 31 March BUSINESS RESTRUCTURING AND COST REDUCTION ACTIONS For the three months ended 30 September 2017, we recognized an expense of $48.4 ($30.9 after-tax, or $.14 per share) for cost reduction and asset actions. Severance and other benefits totaled $38.8, and asset actions totaled $9.6. For the twelve months ended 30 September 2017, we recognized a net expense of $151.4 ($109.3 attributable to Air Products, after-tax, or $.49 per share). Asset actions totaled $88.5 for fiscal year 2017 and primarily included charges resulting from the write-down of an air separation unit in the Gases EMEA segment that was constructed mainly to provide oxygen to one of the Energy-from-Waste plants, the planned sale of a non-industrial gas hardgoods business in the Gases Americas segment, and the closure of a facility in the Corporate and other segment that manufactured LNG heat exchangers. Severance and other benefits totaled $66.3 for fiscal year The 2017 actions were partially offset by the favorable settlement of the remaining $3.4 accrued balance associated with prior business restructuring actions. 3. PENSION SETTLEMENT Certain of our pension plans provide for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date. A participant's vested benefit is considered settled upon cash payment of the lump sum. We recognize pension settlement losses when cash payments exceed the sum of the service and interest cost components of net periodic benefit cost of the plan for the fiscal year. For the three and twelve months ended 30 September 2017, we recognized pension settlement losses of $.9 ($.6 after-tax) and $10.5 ($6.6 after-tax, or $.03 per share), respectively, to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss associated with the U.S. Supplementary Pension Plan. 4. GOODWILL AND INTANGIBLE ASSET IMPAIRMENT CHARGE During the third quarter of fiscal year 2017, we determined that the goodwill and indefinite-lived intangible assets (primarily acquired trade names) associated with our Latin America reporting unit of our Gases Americas segment were impaired. We recorded a noncash impairment charge of $162.1 ($154.1 attributable to Air Products, after-tax, or $.70 per share), which was driven by lower economic growth and profitability in the region. This charge was not deductible for tax purposes and has been excluded from segment operating income. 5. GAIN ON LAND SALE During the fourth quarter of fiscal year 2017, we sold a parcel of land resulting in a gain of $12.2 ($7.6 after-tax, or $.03 per share). The gain is reflected on the consolidated income statements in Other income (expense), net."

20 Page 20 of EQUITY METHOD INVESTMENT IMPAIRMENT CHARGE During the third quarter of fiscal year 2017, we determined there was an other-than-temporary impairment of our investment in Abdullah Hashim Gases & Equipment Co., Ltd. (AHG), a 25%-owned equity affiliate in our Gases EMEA segment. We recorded a noncash impairment charge of $79.5 ($.36 per share) to reduce the carrying value of our investment. This charge was not deductible for tax purposes and has been excluded from segment operating income. The decline in value results from expectations for lower future cash flows to be generated by AHG, primarily due to challenging economic conditions in Saudi Arabia, increased competition, and capital project growth opportunities not materializing as once anticipated. 7. TAX ELECTION BENEFIT During the fourth quarter of fiscal year 2017, we made a tax election related to a non-u.s. subsidiary that resulted in a net income tax benefit of $111.4 ($.50 per share). 8. ENERGY-FROM-WASTE During the second quarter of fiscal year 2016, the Board of Directors approved the Company s exit of its Energy-from-Waste (EfW) business. As a result, efforts to start up and operate its two EfW projects located in Tees Valley, United Kingdom, were discontinued, and a loss on disposal of $945.7 ($846.6 after-tax) was recorded to write down plant assets to their estimated net realizable value and record a liability for plant disposition and other costs. During the first quarter of fiscal year 2017, we determined that it is unlikely for a buyer to assume the remaining assets and contract obligations, including land lease obligations. As a result, we recorded an additional loss of $59.3 ($47.1 after-tax) in results of discontinued operations, of which $53.0 related primarily to land lease obligations and $6.3 was recorded to update our estimate of the net realizable value of the plant assets as of 31 December There have been no changes to our estimates during the fourth quarter of fiscal year NEW ACCOUNTING GUIDANCE In March 2016, the Financial Accounting Standards Board (FASB) issued an update to simplify the accounting for employee share-based payments, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. We elected to early adopt this guidance in the first quarter of fiscal year The new guidance requires excess tax benefits and deficiencies to be recognized in the income statement rather than in additional paid-in capital on the balance sheet. As a result of applying this change prospectively, we recognized $4.4 and $17.6 of excess tax benefits in our provision for income taxes during the three and twelve months ended 30 September 2017, respectively.